26 October 2022

The Treasurer delivered the Federal Budget on Tuesday 25 October 2022, announcing a number of key measures impacting both individuals and families.

According to the official Federal Budget 2022-23 website, below are some of the key priorities for households:

• Cheaper childcare

• Expanding parental leave

• Investing in social and affordable housing

• More and better aged care

• Stage 3 tax cuts

• Low and middle-income tax offset

• Personal income tax compliance program

Cheaper childcare

With the aim of “making childcare more affordable for 1.26 million families”, the Federal Budget 2022-23 announced the Government is “investing $4.7 billion over 4 years from 2022–23 to make early childhood education and care more affordable for Australian families. The Government's reforms will mean 96 per cent of families with children in care are better off and no family is worse off.”

Expanding parental leave

The Government is investing “$531.6 million over 4 years from 2022–23 to expand the Paid Parental Leave scheme and provide greater support to families. In 2026, families will be able to access up to 26 weeks of Paid Parental Leave.” Those eligible are couples with earnings of up to $350,000 and the scheme allows both parents to share the entitlement.

Investing in social and affordable housing

The Federal Budget 2022-23 also states that, “the Government is expanding the remit of the National Housing Infrastructure Facility to allow it to more flexibly use $575 million of existing funds. This will help unlock a projected 5,500 new dwellings.”

In relation to the Regional First Home Buyers Guarantee Scheme, the government has announced that it will establish the “Regional First Home Buyers Guarantee” and it aims to encourage home ownership in regional locations. It will apply to eligible citizens and permanent residents who lived in regional locations for more than 12 months to purchase their first home in that location with a minimum 5% deposit.

More and better aged care

With the goal of ensuring older Australians have the support they need, the Federal Budget 2022-23 provides $2.5 billion over four years to “deliver on its commitments to increase average care minutes per resident and mandate that facilities have a registered nurse on site 24/7.”

Stage 3 tax cuts

The budget did not announce any changes to the Stage 3 Personal Income Tax Cuts that are set to commence from 1 July 2024. As previously legislated, the 32.5% marginal tax rate will be cut to 30% for the tax bracket between $45,000 and $200,000.  The 37% tax bracket will be entirely abolished. Furthermore, there will only be three personal income tax rates – 19%, 30% and 45%.

Low- and middle-income tax offset

The Federal Government has decided not to extend the low and-middle income tax offset (“LMITO”) which is set to cease from 1 July 2023. Currently LMITO is available to Australian resident individuals if their taxable income for the relevant income year does not exceed $66,667.

Personal income tax compliance program

The Government will provide $80.3 million to the ATO to extend the Personal Income Tax Compliance Program for two years from 1 July 2023. This will focus on key areas of non-compliance, including overclaiming of deductions and incorrect reporting of income. The funding will enable the ATO to modernise its guidance products, engage earlier with taxpayers and tax agents and target its compliance activities.

If you’d like to discuss any of the changes announced in the Federal Budget, get in touch with our Accounting and Business Advisory team.

Sources:

Budget October 2022-23, Budget.gov.au